Problem
Suppose the president of the Nature Conservancy, the current U.S. president, and the president of the He-Man Tree Haters Club are the only inhabitants of an island. They expect to be there for a long time, and they have the opportunity to plant more palm trees, the shade and view of which they all could enjoy.
(a) On a single graph, draw hypothetical palm tree demand curves as you would estimate them for each of these inhabitants, and a market demand curve for these public goods.
(b) Suppose that the opportunity cost of planting each palm tree equals the Nature Conservancy president's marginal benefit from the first tree according to the demand curve you have drawn. Draw a horizontal price line at that level.
(c) Indicate the quantity of trees that will be planted
i. If the inhabitants experience freerider problems and are unable to cooperate.
ii. If a benevolent dictator could tax each inhabitant and provide the optimal quantity of trees.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.